Citing the need to raise its auto insurance rates, American International Insurance Co. (AIIC) of New Jersey has appealed the state Department of Insurance's (DOI) denial of its rate-increase request to a higher power, the New Jersey Supreme Court.

AIIC is a subsidiary of American International Group Inc. (AIG) and New Jersey's sixth-largest insurer. The company's appeal is now in appellate division of the Supreme Court.

The DOI told AIIC in late August 2001 that it cannot raise its auto insurance rates by 20 percent, reversing an Administrative Law judge's July 2001 decision that had approved the rate hike for the insurer's 200,000 New Jersey customers.

AIIC says it cannot operate without the rate hike due to financial losses.

Following the DOI's initial denial, AIIC appealed to the New Jersey Office of Administrative Law. The judge ruled in favor of AIIC, but his decision was later overturned by the DOI. The company estimates the judge's decision (which agreed with AIIC on eight of 10 disputed issues with the DOI) would have allowed it to increase premiums by 17.6 percent.

AIIC has said that winning the rate increase would keep it from leaving New Jersey, but an AIG spokesperson would not comment on the decision.

State Farm Indemnity Co., the state's largest auto insurer, and Providence Washington Insurance Co. have also announced plans to exit New Jersey's auto insurance market after rate increases were denied.